We've got news from the MPEG-LA, regarding any possible H264 license changes they might institute at the end of this year. More specifically, they've put out a press release stating that they will not change one specific aspect of the license that governs the AVC Patent Portfolio (to which h264 belongs): MPEG-LA will not collect royalties for internet video that is free to end users. The press release is highly confusing, so let's de-construct what's going on here.

The current license period ends December 31 2010, and fears had arisen that the MPEG-LA would change the licensing terms for h624 for the worse. They could still make disastrous pricing changes despite this press release though, since this press release only covers a single aspect of the h264 codec.

Specifically, the "MPEG LA announced today that its AVC Patent Portfolio License will continue not to charge royalties for Internet Video that is free to end users (known as Internet Broadcast AVC Video) during the next License term from January 1, 2011 to December 31, 2016". This would appear to be good news, and in a way, it is. Sadly, the MPEG-LA doesn't address the bigger concern, the concern that already exists today.

"Products and services other than Internet Broadcast AVC Video continue to be royalty-bearing, and royalties to apply during the next term will be announced before the end of 2010," the press release reads. What does all this mean?

It's actually quite simple. Today, if you encode a video in h264 with a licensed encoder, you can stream this video for free to end users, without the end users having to buy a license of their own. In other words, the license extends downstream towards those that consume the video content. Note, though, that this only applies to free streaming; it does not apply to streaming services that require users to pay for content.

This is the status quo as it exists today, and today's announcement basically states that the status quo regarding free streaming will be held intact for the next five-year licensing period, which ends December 31, 2016. It was feared that the MPEG-LA might start charging for free streaming, but this fear has been pushed aside - for now.

What does not change, however, is the fact that everybody in the supply chain can be held liable if an h264 video is not properly licensed. In other words, if someone encodes an h264 video without having a valid license, everybody downstream is liable, and can be sued by the MPEG-LA. They say that the pricing details for the next licensing period will be announced before the end of the year.